Sensex, Nifty: India VIX up 100% in 13 days; elections, FPI selloff weigh; what's next?
Sensex hit a sub-72,000 mark of 71,882.90 earlier today, losing 782 points in the process. Nifty slipped below the 22,000-mark, with India VIX rising another 13.10 per cent to 21.03.
- May 13, 2024,
- Updated May 13, 2024 10:40 AM IST
Stock market investors dislike uncertainty. With the phase IV of ongoing Lok Sabha elections kicking off today, benchmark indices Sensex and Nifty took a beating, the sixth time (in case of the latter) in the last seven sessions. Sensex hit a sub-72,000 mark of 71,882.90 earlier today, losing 782 points in the process. Nifty slipped below the 22,000-mark, with India VIX, which suggests volatility over the next 30 days, rising another 13.10 per cent to 21.03. With this, the fear gauge has jumped 106 per cent in the 13 straight sessions of gains.
"Voter turnout in Phase III of on-going general elections was at 64.58 per cent across 93 seats. It is pertinent to note that voting had taken place in same 93 seats in 2019 general elections of which BJP won 72 seats," JM Financial said in its weekly note.
Heading into the event, it almost seemed like it was a “done deal”, with the overwhelming consensus by political observers and polls agreeing on a likely strong win by the incumbent BJP government, said MUFG Bank.
"However, lower voter turnout in the first 3 phases of the elections have increased perceived uncertainty on the outcome, even if the consensus is still firmly rooting for a return of the incumbent," it said.
Analysts advised traders to stay light on positions.
"Traders are advised not to be swayed by temporary rebounds and to maintain light positions until concrete signs of a bullish reversal emerge, especially with the impending Lok Sabha election results. Regarding levels, Thursday's low coinciding with the 89EMA at 21900 serves as immediate support, followed by previous swing lows in the 21800 - 21700 range," said Sameet Chavan of Angel One.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said there is a confusion regarding the reasons for the aggressive FPI selling in May.
"There are reports attributing the FPI selling to possible setbacks to the NDA/BJP in the elections. It is important to understand that the FPI selling is due to a change in FPI stance from ‘sell China, buy India’ earlier to ‘sell India, buy China’ now. This change in stance has been caused by the recent outperformance of China and underperformance of India. This is likely to be a near-term trend triggered by the cheap valuations of Chinese stocks and the relative high valuations of India," Vijayakumar said.
Vijayakumar said India’s long-term prospects are much better than China’s.
Stock market investors dislike uncertainty. With the phase IV of ongoing Lok Sabha elections kicking off today, benchmark indices Sensex and Nifty took a beating, the sixth time (in case of the latter) in the last seven sessions. Sensex hit a sub-72,000 mark of 71,882.90 earlier today, losing 782 points in the process. Nifty slipped below the 22,000-mark, with India VIX, which suggests volatility over the next 30 days, rising another 13.10 per cent to 21.03. With this, the fear gauge has jumped 106 per cent in the 13 straight sessions of gains.
"Voter turnout in Phase III of on-going general elections was at 64.58 per cent across 93 seats. It is pertinent to note that voting had taken place in same 93 seats in 2019 general elections of which BJP won 72 seats," JM Financial said in its weekly note.
Heading into the event, it almost seemed like it was a “done deal”, with the overwhelming consensus by political observers and polls agreeing on a likely strong win by the incumbent BJP government, said MUFG Bank.
"However, lower voter turnout in the first 3 phases of the elections have increased perceived uncertainty on the outcome, even if the consensus is still firmly rooting for a return of the incumbent," it said.
Analysts advised traders to stay light on positions.
"Traders are advised not to be swayed by temporary rebounds and to maintain light positions until concrete signs of a bullish reversal emerge, especially with the impending Lok Sabha election results. Regarding levels, Thursday's low coinciding with the 89EMA at 21900 serves as immediate support, followed by previous swing lows in the 21800 - 21700 range," said Sameet Chavan of Angel One.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said there is a confusion regarding the reasons for the aggressive FPI selling in May.
"There are reports attributing the FPI selling to possible setbacks to the NDA/BJP in the elections. It is important to understand that the FPI selling is due to a change in FPI stance from ‘sell China, buy India’ earlier to ‘sell India, buy China’ now. This change in stance has been caused by the recent outperformance of China and underperformance of India. This is likely to be a near-term trend triggered by the cheap valuations of Chinese stocks and the relative high valuations of India," Vijayakumar said.
Vijayakumar said India’s long-term prospects are much better than China’s.